With reasonably-priced apartments, land-pooling and public and private housing and loan incentive schemes, the Home Loan Market is growing rapidly in our country. Home Loans interest rates this year are at their lowest of the last six years. The Loan Interest Rate which is the cost of borrowing money (to be repaid by the borrower to the lender) is decided by lenders after considering several factors. Let’s go through them below for a comprehensive understanding of the subject:

How is your Home Loan Interest Rate Decided

Repo Rate: Repo rate (RR) is a method used by the Reserve Bank of India to control inflation. It is the rate at which the Reserve Bank of India lends money to banks if the banks have a deficit. When the RBI changes the Repo Rate, interest rates on all banking products including home loans are affected.

Government is taking huge steps to reform real estate with an aim to provide Housing For All by the year 2022. One the most significant measure taken by the government in this regard is their push for Affordable Housing. Affordable Housing intends to target the Middle Income Group (MIG), Lower Income Group (LIG) and Economically Weaker Section (EWS) demographic of the country, i.e. the strata which doesn’t own a home, earns in cash, lacks a fixed income and/or doesn’t have the required documents to secure a home loan.

How Cheaper Home Loans are changing the Housing sector

To let these homebuyers get an access to India’s housing inventory, companies such as Investors Clinic came up with the swabhimaan scheme to assist homebuyers, who are financially capable of owning a house but due to lack of proper documents their loan applications gets rejected, to secure a loan; while the centre government brought in the Pradhan Mantri Awas Yojna and facilitated public banks to reduce their home loan interest rates. [Read more…]

The last two months of 2016 created much of a topsy-turvy situation for the country. Surprise demonetization by PM Modi left the entire nation in utter confusion as to what would be the consequences, especially for the real estate sector. And now that the wave has started subsiding and things are slowly coming back to normality, positive effects of demonetization on real estate can be seen already.

Banks Slash Interest Rates; Home Loan Becomes Cheapest in Last 6 Years

Much as predicted, home loan rates have been drastically cut down by major banks like SBI, Union Bank of India, PNB, State Bank of Travancore, IDBI Bank and Indian Overseas Bank. Home loan is expected to become cheapest over the last 6 years, as other banks will follow suit. SBI, being the largest lender, largely affects the lending scenario. It has cut down the effective rate from 9.10% to 8.6%. [Read more…]

If you are thinking of taking a home loan and are confident of generating a surplus every month after paying regular EMI, you can opt for home loan schemes with an overdraft facility that not only cuts interest payments significantly but also cuts loan tenure. SBI, Standard Chartered Bank, HSBC and Central Bank of India offer such home loan products. Apart from pre-payment of your home loan, getting overdrafts is also a great way of getting rid of the burden if you can afford.

Your Guide To Home Loan Overdrafts

How does it work?

In a home loan with overdraft facility, the bank links a current account or a savings account with your home loan account. The borrower can park any extra funds in this account whenever he wants, just like he puts savings in a savings account. Any additional money after the payment of the EMI is treated as pre-payment towards the loan. This effectively brings down the loan amount and the interest is charged only on the balance loan amount. What’s more- you retain the option to withdraw the balance as and when you require it. [Read more…]

Buying a home is one of the best decisions you can take, and if you have taken a home loan the EMI stands out every month till your tenure is over. Once the loan is taken it becomes your first priority to repay it back. It is a prudent decision to prepay your loan if you don’t require it. Home Loan Prepayment is financially beneficial for home loan borrowers.

The average home loan tenure is about 8-10 years in India, which means home loan prepayment is preferred by the borrowers. Home loan interest increases the overall cost of the property which means home loan eats into return from property.

A number of existing home loan borrowers, who are not satisfied with the services of their existing lender, are now choosing to transfer their loans to another bank. The transfer of loan, also called refinancing, has become popular in the Indian market, nowadays. The main reason of transferring a home loan is to get advantage of a lower rate prevailing in the market. Apart from this, there can be few other reasons, such as:

When you are not satisfied with the services of your existing lender.

When your existing lender is not flexible enough to incorporate something new into the scheme.

When you want to increase the tenure of your loan or decrease the EMI, but the current lender does not agree to it.

When the value of your property has shot up much above the original value and you want to top-up your loan for renovation or other requirements, but the lender does not agree to it. [Read more…]

To make it easier for the buyers to realize their dream of owning a home, the government is taking regular steps in this direction. The significant reduction in repo rate at the beginning of this financial year and a lesser risk weight are a few initiatives taken by the government. In another attempt to bring relaxation to the housing finance segment, the RBI has increased the amount of loans the banks can give against a property purchase.

Earlier the banks could give out only 80% of the property’s value as loan; 90% of the value was allowed but only for properties costing less than 20 lakhs. Now this Loan to Value (LTV) figure has been increased to 30 Lakh. Banks can now give out 90% of the value as loan for properties costing less than Rs 30 Lakh. [Read more…]

Good news for homebuyers! During the end of September 2015, RBI made a surprise move by reducing the repo rate to 6.75%, that is, by 50 basis points. It has made a positive impact on the home loan interest rates as the banks have reduced the same by 40 basis points. Several types of home loans are being offered by the banks at reduced rates.

For the readers who do not know much about Repo Rate, here is a detailed description.

Repo rate is the rate at which the RBI lends money to other commercial banks when they fall short of funds. A reduction in repo rate means that the banks can borrow funds from the central bank at lower interest rates and when they are benefitted they pass on the benefits to their customers by reducing the rates of interest on different types of loans they offer like home loan, car loan, etc. [Read more…]

People opting for home loan to buy their dream home, have become a very common trend in India. Today the market is buoyant with home loan offers made available by various financial institutions. People take right home loans for different purposes, like buying property, construction work, work or buying land. Varied alternatives are available, nowadays. Housing Financial Companies [HFCs] provide various options today to woo their customers.

There are different home loans for different requirements. Below is a list of home loans available-

Home Purchase Loans are the basic loans you can opt for to buy a home. These types of loans are offered by all banks and HFCs. [Read more…]

We all need to protect our home and personal property against liability for accidents that may injure people or damage property. So a home insurance covers your home and your personal property. Just as there are different home styles, there are insurers who offer a menu of different properties.

Taking a home insurance decide how much coverage you need. The bigger the coverage the less you pay from your pocket, if and when disaster strikes. The amount of coverage you buy for your home contents and personal property will affect the price you pay. Shop around before you decide there are various insurance companies which offer you different rates and facilities for the same policy. Do your homework well and don’t get sweet talked by an agent’s glib talks. Take advice, ask people before buying an insurance policy. Compare the deductibles; higher deductibles may be available at a reduced rate.[Read more…]